Part of our regular practice is defending companies that have been sued. Most commonly we defend against claims of patent or trademark infringement, though we also handle copyrights, trade secrets and IP-based contract disputes (e.g., licenses). Through decades of experience we have developed sensible procedures for learning early about new lawsuits against clients, for notifying them about it, and for providing early guidance on how to navigate waters which we hope they have never seen and will never see again.

When a client gets sued, the lawyers stand to profit handsomely. Notwithstanding this fact, lawyers are fiduciaries. Thus, lawyers must put the interests of their client ahead of their own. Deflecting this responsibility as a business decision to be made by corporate executives usually falls short of doing right by the client. Corporate executives rarely have the expertise of experience to appreciate the cost and pain of litigation. Even if an executive has some experience, it is rarely so relevant that the lawyers can avoid making a business case about how to handle the suit. Indeed, though lawyers will frequently urge a client to stand tough and fight hard to show the plaintiff and others that they cannot be pushed around, the cost of this attitude usually fails badly over the long run. The attorney-client relationship must be one of trust, and trusting, long term relationships flourish when the lawyers show their clients that the lawyers are putting the interests of the client ahead of their own, and can faithfully resist the lure of greater profits from stoking emotions.

Here are some general concepts that come into play:

How to get early notification about lawsuits against clients

  • Services provide litigation watches
  • The need for speed

How to notify a client that they have been sued

  • The need for empathy
  • Warning about ambulance chasers and guidance on how to handle them

What initial and early guidance a client needs when they have been sued

  • Sharing a budget with low, high and likely estimates on total cost to the client
  • Initial assessment of the validity of the plaintiff’s asserted right
  • Initial assessment of the strength of the plaintiff’s infringement claim
  • Identification of potential defenses, including equitable defenses
  • Identification of potential procedural maneuvers, such as a venue challenge
  • Identification of asymetric responses such as IPR, countersuits with the client’s own IP, and suits in other venues
  • Counseling regarding acquisition of third party rights
  • Discussion of how the lawsuit will impact the client’s business, such as customer attitudes
  • Potential indemnitors, such as vendors or insurers
  • Discussion of settlement, and the benefits of holding your nose to get a deal done
  • Taking the emotion out of the situation and staying focused on the long term health of the business

About the author

Steve Sereboff, the author of this post, will lead a discussion of these issues at our weekly SoCal IP Institute Meeting on November 20, 2023 which will qualify for 1 hour of MCLE credit with the State Bar of California.